Question

The following events occurred over the course of a year at Bagby Corp., which uses a job order costing system:

1.	Direct materials purchases totaled $460,000. Bagby Corp tracks its direct materials separately from its indirect materials. Purchases were made on account.
2.	$230,000 of indirect materials were used in production. Bagby uses a separate Supplies Inventory account for indirect materials.
3.	$415,000 of direct materials were used in production.
4.	The direct labor payroll was $940,000 (credit Wages Payable).
5.	Other manufacturing overhead costs incurred during the year totaled $540,000.
6.	Bagby applies overhead based on a predetermined overhead rate of $15 per machine hour. The company used 50,000 machine hours during the year.
7.	During the year, Bagby transferred goods costing $2,100,000 into the Finished Goods Inventory account.
8.	Bagby sold products with a manufacturing cost of $2,050,000 to customers during the year.

Prepare T-accounts for the following accounts: Direct Materials Inventory, Work in Process Inventory, Manufacturing Overhead Control, and Finished Goods Inventory. Record the transactions from part (a) in the T-accounts and calculate ending account balances. Assume the following beginning account balances (Post entries in order presented in the problem):

Account		Balance
Direct Materials Inventory		$20,000
Work in Process Inventory		$12,000
Finished Goods Inventory		$35,000

Direct Materials Inventory

Work in Process Inventory

Manufacturing Overhead

Finished Goods Inventory

Answer 1

Answer:
	Direct Materials Inventory
Bal.	$ 20,000
(1)	$ 460,000	(3)	$ 415,000
Bal.	$ 65,000
	Work in Process Inventory
Bal.	$ 12,000
(3)	$ 415,000	(7)	$ 2,100,000
(4)	$ 940,000
(6)	$ 750,000 (50,000 x $ 15)
Bal.	$ 17,000
	Manufacturing Overhead
(2)	$ 230,000	(6)	$ 750,000
(5)	$ 540,000
Bal.	$ 20,000
	Finished Goods Inventory
Bal.	$ 35,000
(7)	$ 2,100,000	(8)	$ 2,050,000
Bal.	$ 85,000